City's property values shrink for the fifth year

The incredible shrinking Minneapolis tax base is back for the fifth straight year. The city’s estimated market value is $32.1 billion as of the January assessment roll. That’s down from $38.3 billion at the peak of the city’s value in the 2007 assessment. The 16 percent drop in the assessor’s estimate of the value of city properties represents a loss of $1 in every $6 of value the city had in 2007.

What does that mean? To levy the same amount of money with a falling tax base, the city must raise its tax rate. That hurts most the neighborhoods such as those by the Chain of Lakes that haven't seen as much of a drop in home prices as those plagued with high foreclosure rates. You can learn more about the property tax system here.

The crash in housing values led the city’s drop in assessed values, but commercial-industrial property later joined the plunge. The only major property sector gaining noticeably in value for the 2012 assessment was apartments, where values rose 2.3 percent.

The shrinkage in the city tax base was 3.1 percent for 2012. That’s somewhat better than last year’s 4.2 percent drop. But City Assessor Patrick Todd said it’s still hard to say when the city’s real estate market will trend upwards, except in small areas. The median value of single-family homes was down by at least 1 percent of value in each neighborhood in the 2012 assessment. “I don’t think we’ll see much happening if the economy, interest rates, unemployment and foreclosures remain relatively unchanged,” Todd said via e-mail.

The city’s property value slide is actually less in percentage terms than the statewide loss in estimated market value, according to Minnesota Department of Revenue figures..